News from Serious Fraud Office
Mark James Whelan has entered guilty pleas to 66 charges in the Auckland District Court today in relation to a Serious Fraud Office investigation. The charges were laid in September 2011 for Mr Whelan’s principal role in a scheme to defraud Dunedin-based vehicle finance company, Motor Trade Finances Limited.
He faced 25 individual charges and 41 joint charges of obtaining by deception under the Crimes Act. The 40 year-old unemployed man was formerly an Auckland-based retail dealer for MTF and later a franchisee of the company.
While in those positions and between July 2005 and February 2009, Mr Whelan wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. He obtained loans totalling $4.9 million and used those funds for personal gain, including the purchase of land, servicing of personal debts, and investing in a futures trading scheme, Global Futures Trading Limited (Global Futures).
Three of Mr Whelan’s co-accused have already pleaded guilty to related charges laid by the SFO and three other co-accused are facing a trial to be heard in March 2013.
Mr Whelan faces separate charges in relation to his involvement with Global Futures and Derivatek New Zealand Limited.
Background to investigation
From March 2005 Mark James Whelan was a Retail Dealer for Motor Trade Finances Ltd (MTF), and became a franchisee of the company in January 2008. While Mr Whelan was in those positions he wrote a number of loans in the names of family, friends and associates using various non-existent assets as security. In early 2009 these loans went into default and MTF was unable to locate those assets for repossession. Six other individuals were facing joint charges under the Crimes Act for their roles in obtaining illegal funds under Mr Whelan’s scheme, to which three have already pleaded guilty.
Crimes Act Offences
Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person—
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.
(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.
(3) This section applies whether or not the person was required to deliver over the identical property received or in the person’s possession or control.
(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.
Section 240: Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
(b) in incurring any debt or liability, obtains credit; or
(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or
(d) causes loss to any other person.
(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
o (i) knows that it is false in a material particular; or
o (ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.
242 False statement by promoter, etc
(1) Every one is liable to imprisonment for a term not exceeding 10 years who, in respect of any body, whether incorporated or unincorporated and whether formed or intended to be formed, makes or concurs in making or publishes any false statement, whether in any prospectus, account, or otherwise, with intent—
(a) to induce any person, whether ascertained or not, to subscribe to any security within the meaning of the Securities Act 1978; or
(b) to deceive or cause loss to any person, whether ascertained or not; or
(c) to induce any person, whether ascertained or not, to entrust or advance any property to any other person.
(2) In this section, false statement means any statement in respect of which the person making or publishing the statement—
(a) knows the statement is false in a material particular; or
(b) is reckless as to the whether the statement is false in a material particular.
Role of the SFO
The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.
The SFO operates three investigative teams:
• Evaluation & Intelligence;
• Financial Markets & Corporate Fraud; and
• Fraud & Corruption.
The SFO operates under two sets of investigative powers.
Part I of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”
Part II of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”
The SFO’s Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO’s three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz